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CIRCULAR No

CIRCULAR No.12-TC/TCT ON THE 11TH OF FEBRUARY 1995 PROVIDING ADDITIONAL GUIDANCE FOR CIRCULAR No.70-TC/TCT ON THE 18TH OF AUGUST 1994 ON THE IMPLEMENTATION OF STATE BUDGETARY COLLECTIONS ON HOUSE RENT ACTIVITY

As a follow-up to Circular No.70-TC/TCT on the 18th of August 1994 guiding the implementation of budgetary collections on the issuance of certificates of dwelling house ownership and residential land-use right in urban areas by virtue of Decree No.60-CP on the 5th of July 1994, and on the purchase, sale and dealing in dwelling houses by virtue of Decree No.61-CP on the 5th of July 1994 of the Government; to conform with the actual rent activity, the Ministry of Finance provides the following concrete guidance for the management of budgetary collections on this activity:

1/ The economic organizations, administrative and non-business public agencies, mass organizations, armed forces and individuals, whose houses are rented by domestic or foreign organizations and individuals, must declare to the tax agency, and pay the following taxes and other levies:

- License tax;

- Turnover tax;

- Profit tax;

- Land and house tax;

- Payment of other taxes and levies (if any) shall comply with provisions of law.

The State-owned dwelling house fund, which has been transformed into business units, is exempt from turnover tax and profit tax, but shall apply the State budgetary collection system by virtue of the Inter-Ministerial Circular No.08-LB/TT issued on the 10th of February 1993 by the Ministry of Finance and the Ministry of Construction, guiding the collection and management of State-owned dwelling house rent, and Circular No.09-TC/TT issued on the 10th of February 1993 by the Ministry of Finance guiding the calculation and collection of basic depreciation charge on State-owned dwelling houses for rent.

2/ Collection of turnover tax and profit tax shall be effected as directed as follows:

a- On turnover tax: the taxable turnover is the whole house rental without any subtraction.

In case the tenant pays his rent many months or many years in advance, the taxable turnover is the whole advance payment including repair and reconstruction expenses paid by the tenant (if it is written in the rent contract). In case of an adjustment to increase the rent term, the taxable turnover shall also include the adjusted turnover.

b- On profit tax: Pursuant to Article 14, 15 and 20 of the Law on Profit Tax, and the Law on Amendments to a Number of Articles of the Law on Profit Tax, the calculation of the profit tax for each category of persons engaged in house renting activity shall proceed as follows:

- With regard to non-business organizations and individuals, such as households, public offices, mass organizations, armed forces units... which rent houses: the tax agency, basing itself on gathered documents, has the right to determine the taxable profit in order to calculate profit tax, including advance collection of rent for many months, quarters or years. Profit tax shall be paid in full together with the turnover tax at one time as prescribed by the tax agency.

- With regard to the businesses which rent houses and rooms as sideline, they must make separate accounts of the renting activity and pay a provisional monthly profit tax, and payment of the remainder is made at the annual settlement of accounts.

In case of advance collection of house rent for many years, turnover tax shall be paid fully at one time, according to Point (a), and the taxable profit at the annual settlement of account is equal to the turnover minus paid turnover tax: The remainder shall be divided to the number of years for which the rent has been paid, then subtraction shall be made of reasonable regulatory costs of the accounting year.

In the course of implementation, if any problems or difficulties arise, the branches and localities should report to the Ministry of Finance for consideration and settlement.

For the Minister of Finance

Vice Minister

VU MONG GIAO